Holiday home - Primary workplace tax trap

Landlords frequently visit their properties at irregular intervals to carry out repairs, for instance, or to maintain contact with tenants. The travel costs that arise here as a result, in principle, are associated with the rental income and can be deducted as allowable costs. Travel cost criteria are normally used to account for these journeys - therefore, either the actual costs, or a flat rate of € 0.30 per kilometre driven (outward and return trips).

The FG Münster, in its ruling of 15.5.2025 (case reference: K 1916/21 F), had to decide whether the primary workplace rules also apply to a holiday home. In this case, it was solely the distance-related tax allowance (€ 0.30 per kilometre driven or € 0.38 starting from the 21st kilometre) that could be claimed. In the case in question, a GbR [company/partnership under German civil law], which consisted of a father and a son, generated income from the letting out of two holiday homes. For 2019, the company claimed a deduction for, among other things, travel costs as well as additional expenses for meals that were related to cleaning and repair work. The local tax office did not allow the expenses because it presumed that there had also been a private reason for the trip. The legal action of the GbR before the FG Münster was however partially successful.

The court stated that both the holiday homes must each be viewed as a primary workplace. Therefore, the travel costs could only be included in the amount of the distance-related tax allowance in addition to a deduction for the private portion. The basis of the decision was Section 9(3) of the Income Tax Act [Einkommenssteuergesetz, EStG], which also has to be used for income from letting. Given that in the case of landlords - unlike in the case of employees - no primary workplace will have been assigned (by an employer), it is mainly quantitative criteria that will have to be used as a basis. The determining criterion will be whether at least one third of normal working time is spent performing work directly at the property. As the partners mostly carried out the necessary repairs themselves, the court viewed this threshold as having been significantly exceeded. Additional expenses for meals could be allowed solely for the first three months after the work had commenced. However, in the case in question, this period had already expired.

The FG granted permission to lodge an appeal because no established case law of the highest courts has hitherto existed with respect to Section 9(3) EStG and, thus, fundamental questions are still open. However, as no appeal has been lodged, this ruling will remain in place for the time being. This case makes it clear how important it is to have careful documentation of the work and trips. A comprehensible record is required not only for the number of trips, but also their connection to the letting activity and the delimitation of private reasons. It is also clear that where the number of trips to the let property is high there is a risk that the local tax office will only acknowledge the distance-related tax allowance.